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Risk Management

Risk Management

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Published by: Stephen Penn on Jan 13, 2013
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Risk Management

Prepared by Stephen Penn October 6, 2012 Information derived or quoted from Rita Mulcahy

5 Overall Project Management Processes with Risk Management
•ID & Managed •Plan RM •ID Risk •Qualitative •Quantitative •Plan Risk Responses

•Monitor & Control Risks

Risk Management Process Opportunities Threats .

How likely a risk event will occur Impact or amount at stake When it will occur How often it will occur Some one that does not want to take on risk Degree of risk acceptable Point at which risk becomes unacceptable Project Constraints (scope. 3. 4.Concepts and Terms Uncertainty Risk Factors Risk Averse Risk Tolerance Risk Thresholds Lack of knowledge 1. cost. etc) Risk areas . time. 2.

Plan Risk Management •How much time should we spend? •Who will be involved? •How should we perform risk management? .

Methodology Roles & Responsibilities Budgeting Timing Risk Categories Definitions of probability & Impact Stakeholder tolerances Reporting & Tracking . 8. 6. 4. 2. 3. 5.“What will I have when I’m done with …?” • Risk Management Plan 1. 7.

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stakeholders. experts Reorganized by root causes to find more risk .Identify Risk (tools & techniques) Documentation Reviews Documents can help identify risk Brainstorming One idea generates another Delphi Technique Interviewing Root Cause Analysis Experts participate anonymously Interview participants.

Identify Risk SWOT Analysis Identifies strengths and weaknesses and thus risk Checklist of risk categories to identify risk Validate assumptions which may lead to risk Checklist Analysis Assumptions Analysis Diagramming Techniques Cause and effect diagrams and flowcharts .

Outputs to Identify Risk • Risk Register Example .

Qualitative Risk Analysis .

Perform Qualitative (Subjective) Risk Analysis (Probability and Impact Matrix) .

•Watchlist •Risk Grouped by category •Risk Register Updates .

g. schedule. Determine cost and schedule reserves 5.• • Numerically analyzing the probability and impact of risks how risk could affect the objectives of the project 1. Determine quantified probability to meet project objectives (e. . Determine overall project risk 3. 75% chance) 4. or scope targets. Create realistic and achievable cost. Identify risks requiring more attention 6. Determine risk that warrant a response 2.

3. 4. Investigate highest risks on the project Determine type of probability distribution Which risks have the most impact Determine quantified risk through EMV or Monte Carlo . 2.Quantitative Risk Analysis 1.

• Interviewing •Cost & Time Estimating •Delphi Technique •Use of historical records Determine Quantitative Probability Impact •Expert Judgment •EMV •Mote Carlo •Decision Trees .

Decision Tree – choose between many alternatives (Impact) .

3. 2. 4. Prioritized list of quantified risk Amount of contingency time and cost reserves needed Realistic and achievable completion dates and project costs The qualified probability of meeting objectives Trends in quantitative risk analysis .Quantitative 1. 5.

2. Eliminate the threats before they happen Make sure opportunities happen Decrease the probability and/or impact of threats Increase the probability and/or impact of opportunities For Residual Threats Contingency Plans Fallback Plans . • 1. 3.“What are we going to do now about each top risk? 1. 2. 4.

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Risk Audits Reserve Analysis Status Meetings Closing of Risks How much reserve remains and how much is needed Team meetings where risked is discussed Closed finished risk to focus on remaining risk . have plans for major risk. risk register and update documentation Prepared by PM. risk response owners are prepared. Prove you have identified risk.Monitor and Control Risk Workarounds Risk Reassessments Unplanned responses to deal with problems Review risk plan.

PM Plan Updates Monitor & Control process will uncover changes Updates to schedule. quality metrics Risk templates like risk register. quality.Outputs of Monitor & Control Risk 1. Change Requests 1. Project Doc Updates 5. 4. Outcomes of risk assessment and risk audits Updates to risk management and ID of new risk Closing of risk Details of what happened Lessons learned 3. 2. and other data which becomes historical records 4. Risk Register Updates 2. 3. 5. checklists. hr. stakeholder management. cost. etc Roles & Responsibilities. Organization Process Assets Updates .

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